Zuma, Mandela Heirs May Face $140 Million Bill for Mine Ruin

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Zondwa Mandela

Zondwa Mandela

Photographer: Alexander Joe/AFP via Getty Images

A nephew of South African President Jacob Zuma, a grandson of Nelson Mandela and three other partners were held liable for the destruction of gold mining assets near Johannesburg that may total 1.7 billion rand ($140 million).

Khulubuse Zuma and Zondwa Mandela were among the directors of Aurora Empowerment Systems and are personally liable for the company’s failure, according to a ruling handed down by Judge Eberhard Bertelsmann in the High Court in Pretoria Thursday.

They were “indisputably reckless” in overseeing the destruction of assets, the theft of equipment and loss of 5,000 jobs, Bertelsmann said.

Mandela and three colleagues -- Thulani Ngubane, Solly Bhana and Fazel Bhana -- fraudulently misrepresented Aurora’s ability to pay for the Pamodzi Gold Ltd. mines near Johannesburg in 2009 when its previous owner was placed under provisional liquidation, the judge said. Zuma, while not involved in the bid process, showed “reckless disregard” for his role as Aurora’s chairman in the ensuing chaos, he ruled.

“The entire project was and remained a pipe dream,” Bertelsmann said. “The respondents must have known from the first moment that they would wreak havoc in the miners’ lives through their actions yet they pressed ahead.”

As such, Mandela, Ngubane and the Bhanas are personally liable for claims proven by the liquidators, who ran the sale process and brought the case, the judge ruled. Zuma is liable for losses incurred after Dec. 1, 2009.

Privileged Suffer

The workers “suffered a lot and now the privileged must suffer,” Gideon du Plessis, the general secretary of Solidarity, a union representing the mine’s employees, said after the ruling. “They will know how the workers feel when they also have nothing left in their houses.”

Mandela, Ngubane and the Bhanas are considering an appeal, Etienne van der Merwe, their lawyer, said outside the court. The liquidators’ claims of 1.7 billion rand are “vastly exaggerated” and must yet be proven in court, he said.

Zuma is heartened by the judge’s assertion that he wasn’t responsible for misrepresenting Aurora’s finances at the time of the bid, said Vuyo Mkhize, his spokesman. There is a “strong basis” for an appeal, he said.

In court submissions, Mandela, Zuma and their fellow directors denied they were responsible for the mining venture’s failure, saying they never had full control of the assets.

Zuma tried to obtain alternative funding for Aurora after an investor backed out and paid 35 million rand of his own money to try and resolve the company’s problems, Mkhize said.

Pamodzi’s creditors will now start the process of preparing claims against the men, John Walker, the liquidators’ lawyer, told reporters in Pretoria. The final figure may be more or less than the original 1.7 billion rand stated, he said.

“The rule of law has been restored,” Du Plessis said. “We have been very worried all along that the justice system is failing the workers but today Judge Bertelsmann showed us that we can believe in the rule of law and the legal system in this country.”

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